Teva Pharmaceutical Industries Limited (NYSE:TEVA) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Teva Pharmaceutical Industries Limited, a pharmaceutical company, develops, manufactures, markets, and distributes generic medicines, specialty medicines, and biopharmaceutical products in North America, Europe, and internationally. The US$13b market-cap company announced a latest loss of US$4.0b on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Teva Pharmaceutical Industries' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Consensus from 20 of the American Pharmaceuticals analysts is that Teva Pharmaceutical Industries is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$1.7b in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 41% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Teva Pharmaceutical Industries' growth isn’t the focus of this broad overview, though, keep in mind that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with Teva Pharmaceutical Industries is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are too many aspects of Teva Pharmaceutical Industries to cover in one brief article, but the key fundamentals for the company can all be found in one place – Teva Pharmaceutical Industries' company page on Simply Wall St. We've also compiled a list of pertinent factors you should look at:
- Valuation: What is Teva Pharmaceutical Industries worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Teva Pharmaceutical Industries is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Teva Pharmaceutical Industries’s board and the CEO’s background.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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